UK Oil & Gas Investments Plc (LON:UKOG) has increased its footprint in the Weald basin, in southern England, through a deal with Celtique Energie and Magellan Petroleum.
It is acquiring 100% of PEDL234 from the two companies, which each have 50% of the project.
The transaction, worth £3.5mln, sees the company add a regulatory approved drilling opportunity in the Kimmeridge which proved successful during testing at the Horse Hill project.
It more than doubles UKOG’s net acreage holdings in the prime Kimmeridge limestone oil province, the company highlighted.
Stephen Sanderson, UKOG executive chairman, pointed to the success of Horse Hill - which was flowed at a total of 1,688 barrels of oil per day in testing - and described the new acquisition as “an entirely logical step”.
"This is a transformational step for the Company and its position in the new Weald Kimmeridge Limestone oil resource play,” he added.
“The transaction more than doubles our net acreage position and potential recoverable resource base in the most prospective part of the play, all at a very reasonable entry price.
“The transaction makes UKOG the leading player and acreage holder in Kimmeridge oil and a significant player in the UK onshore oil industry.”
The new acreage also includes a gas appraisal opportunity, at the Godley Bridge discovery.
UKOG will pay Celtique Energie £625,000 in cash and £1.125mln in shares, and the Magellan side of the deal is on the same terms. A total of 142.6mln new shares will be issued to the sellers.
The acquisition is conditional upon the securing an extension of PEDL234, to enable the drilling of the BB-1 well. UKOG highlighted the well pad has already been built, and it will seek the remaining consents required from the Health and Safety Executive and OGA.
It is planned that the BB-1 well could be drilled in 2017.